Can you use equity to service your loans?


Sorry if this has been discussed before. :eek:

Here are the basics:
- Plenty of equity.
- Want to buy more property.
- Serviceability a problem.

* Is there a way I can use the equity I have to service my (future) loans? I've sort of looked at a LOC, but it didn't seem like it would be possible.

Anyway, thanks for the help (in advance), and this is a hypothetical question (at this stage!).
Here is my 2c

You are close with your thinking, you are just barking up the wrong tree. Use the equity, but not to service the debt (personally - not something which I would either recomend or condone - seen it go bad way too many times).

Use the equity to add value then sell - keep doing this until you have sufficent cash to make the properties you buy cashflow +ve.
You can include the interest payments as a cost to doing the flip!

Guessing you havent done it before - so keep reading through the forum for a couple of hours/days/weeks and learn more before diving in head first.

Again - just my 2c, which might only be worth 1c... ;)

Serviceability for YOU or for the LENDER ?

If its for you, in the current environment in most circumstances capping interest without a corresponding redn in non deductible debt is likley a no no. Sometimes its workable.

If it a lender issue, looking just at a diff lender or restructing what you have could be helpful

Hi Guys,

Firstly, thank you for trying to help me.

@Blacky - Thanks for the view, but I'm not keen to sell.

@ Rolf - To be honest, a bit of both! I'm doing fine now, perhaps I could even get one more property with no worries, but sooner or later, I'm going to get to the stage where I'll have plenty of equity, but won't be able to service the debts. That's what prompted this topic - is there a (good/safe) way I can use some of the equity I have to help service my loans?

Once again, thanks to all of you! :)
@Blacky - Thanks for the view, but I'm not keen to sell.

Sorry Supa Rex, I didnt explain myself well enough. I didnt mean for you to sell your current property(ies).
What I was trying to say was use your existing equity to purchase another property which you will do a flip on.
That way you are using you equity to generate cashflow.